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Excess money in cash ledger refundable even two yrs after paying GST

  • 19 Nov 2021
  • Edukating Team
  • 80

Those who have excess money lying in the cash ledger for the purpose of paying goods and services tax (GST) would be able to take it out even after two years of the date of paying tax, a move that would ease the cash flow of the companies. Currently, assessees cannot take the refunds of this money after two years. That time bar has been lifted by the government.The Central Board of Indirect taxes and Customs (CBIC) has issued necessary clarifications in this regard.

A taxpayer claiming refund under GST is required to file a refund application to the GST authorities within the two years from the ‘relevant date’. Generally, the relevant date is the date of payment of tax. But in case of exports, it is the date on which a ship or aircraft leaves India.Under GST, the taxpayer is first required to deposit cash into the electronic cash ledger (ECL) maintained on the GSTN portal. This cash balance lying in ECL can be utilized by the taxpayer against their tax liability reported in GST returns.

Practically, one may notice that there exist cases where taxpayers have deposited excess amounts in their ECL which could not be utilized against any tax liability.At times this amount may remain in ECL for more than 2 years.Field officers were rejecting refund applications relating to such amounts lying in ECL arguing that two years have been lapsed and thus such an amount cannot be available as refund to the taxpayer, Sunil Kumar, deputy general manager at Taxmann, said.In this backdrop, the CBIC has issued a clarification that the limitation period of two years will not be applicable for refund of excess balance lying in ECL.The refund clarifications are useful as the same is likely to improve working capital management for dealers with excess balance in electronic cash ledgers. Such dealers thus far, were unable to use alternatively the excess balance in their electronic cash ledgers” said Harpreet Singh, Partner at KPMG India.

The CBIC view would also be beneficial for the ongoing litigations relating to excess payment of tax under various cases such as amount paid during investigation stages, amount wrongly paid by the taxpayers, levy which later held as unconstitutional by the judiciary. It can be argued that the limitation period will not be applicable in these cases too," he said.In a similar pattern, CBIC also clarified that assessees are entitled to get refund of money lying in ECL due to tax deducted at source (TDS) or tax collected at source (TCS) under the GST regime. TCS could be levied if someone uses an ecommerce platform for selling its goods. TDS and TCS could also be levied if a company is dealing with the government.

Source - https://www.business-standard.com/article/economy-policy/excess-money-in-cash-ledger-refundable-even-two-yrs-after-paying-gst-cbic-121111801017_1.html